Other segments of the U.S. bond market fared well. High yield bonds did best as they continued to attract investors with relatively large coupons. Higher-quality corporate bond returns were more subdued. Municipal bonds produced modest gains amid muted issuance. Agency mortgage-backed securities also rose slightly.

Non-U.S. bond returns were posi- tive. Japanese bond yields rose amid concerns about rebuilding costs. The yen strengthened to post-World War II highs before falling sharply due to global central banks’ currency market intervention. Bond yields rose in large European economies, though a stronger euro and pound lifted returns to U.S. investors in dollar terms.